Economic Growth Relationship Research Articles

Analysis of the influence of macroeconomic factor on long-term and short-term fluctuation of the Indonesian stock exchange (BEI) using the error correction method (ECM) approach

This research aims to empirically test the influence of the short-term equilibrium relationship and long-term equilibrium relationship of economic growth, interest rate, inflation, and exchange rate on IHSG (IDX Composite) using empirical Error Correction Model (ECM) data from 2000 to 2023. During the observation period, the macroeconomic variables showed no significant influence on the movement of the IHSG (IDX Composite) in the short-term equilibrium relationship, whereas in the long-term equilibrium relationship almost all variables, namely economic growth, interest rate, and exchange rate, had a significant influence on the IHSG ( IDX Composite), while inflation has no short or long term effect on the IHSG.

Eco-tech fusion: Unraveling the nonparametric causal effects of fintech, natural resources, digital infrastructure, and economic growth on environmental sustainability from a quantile perspective

Environmental sustainability has the potential to uphold an ecological balance in the natural environment. Unfortunately, it is challenging due to the environment's multifaceted nature and the complex interlinkages of environment with social, economic, and technology-related factors. The current study inspects the causal effect of fintech, natural resource rent, digital infrastructure, and economic growth in relation to environmental sustainability. This study comprises the time frame of 2002–2022 in the BRICS nations. The "nonparametric causality-in quantiles approach" has been applied, which is an advanced econometric tool. The results confirm that all BRICS countries, i.e., Brazil, Russia, India, China, and South Africa, show a significant causal impact of the said predictors on sustainable environment in most cases. This study is significant for scholars, investors, policymakers, manufacturers, and environmental regulatory bodies.

Corporate influence, conservative “model bills,” and state economic outcomes

AbstractResearchers have found positive relationships between economic freedom and economic growth and negative relationships between lobbying and growth. We test the impact of policies induced by lobbying for free markets, using state‐level data to evaluate the effects of high enactment rates for bills advocated by a prominent free‐market lobbyist, the American Legislative Exchange Council (ALEC). Our approach accounts for the probability ALEC targets states. We find that, holding constant existing economic freedom, there is no effect on output, possibly negative effects on employment, and wage increases. States raise more revenue and increase expenditures. Poverty and inequality rise.

Solution analysis of Solow Growth Model for financial practices and applications

Solow Growth Model (SGM) is an economic model that is exogenous in nature and examines the relationship between the output and input levels in an economy over a period of time. It projects long-term economic growth in relation to labour (population growth), savings rate, and technological development. However, traditional approaches to solving the Solow growth model may rely on complex mathematical techniques that might not give an accurate representation of real-world economic dynamics. Thus, this paper applies the Natural Decomposition Method (NDM) to the Solow growth financial model. The NDM is a numerical technique that combines the Natural Transform (NT) and the ADM-Adomian decomposition method. The NDM simplifies problem-solving by converting the original differential equations into algebraic equations as regards limitations associated with nonlinear models. From the results obtained by applying the NDM to the Solow growth financial model, researchers and policymakers can better understand the interplay between financial variables, such as savings rates, investment, and capital allocation, and their impact on economic growth dynamics, as a systematic approach to capturing the complex relationship between finance and economic development within the Solow framework is ensured. Further research and application of the NDM can contribute to advancing the knowledge of economic dynamics and support evidence-based decision-making in economic policy.

Foreign Divestment, Domestic Investment, and Economic Growth Relationship in Southern African Development Community During the COVID-19 Pandemic: Panel Ardl Approach

Foreign Divestment, Domestic Investment, and Economic Growth Relationship in Southern African Development Community During the COVID-19 Pandemic: Panel Ardl Approach

THE IMPACT OF EXCHANGE RATE VOLATILITY AND INFLATION ON THE NIGERIAN ECONOMY

In African countries, exchange rate volatility, inflation, and economic growth relationships remain debatable, especially in Nigeria, because of the historical homogeneity of the monetary macroeconomic variables among the member countries. Therefore, the purpose of this paper is to examine the relationship among exchange rate volatility, inflation, and economic growth in Nigeria from 1985 to 2022. The autoregressive distributed lag (ARDL) estimation technique of analysis was employed in achieving the objective of the study. We employed GARCH (1, 1) to obtain the volatility of the exchange rate data. Results indicated that exchange rate volatility and inflation adversely influenced the growth of the Nigerian economy. Further analysis reveals a negative impact when the interaction of exchange rate volatility and inflation is tested on growth. Also, the result revealed that gross capital formation promotes the growth of the Nigerian economy. This result confirms the positive evidence ascertained in the literature on the investment growth nexus. It is therefore recommended that policies that focus on improving local currency should be the top priority of the government. Also, policies that would reduce overdependence on foreign raw materials for production should be encouraged.

A Causal Analysis of Financial Development and Economic Growth

In terms of cause and effect, financial development and economic growth relationship has been a major empirical issue for researchers and policy makers. This study explores the causal linkages between financial development and economic growth catering for country specificity and structural shocks pertaining to different cross sections in SAARC and ASEAN countries by calling in the bootstrapping technique proposed by Konya (2006). We considered the panel estimation to allow for contemporaneous correlations and performed the Wald test for Granger Causality with country specific bootstrap critical values catering for structural breaks. Empirical investigation reveals the existence of both the demand and supply leading phenomena for the selected period of 1980-2019. The direction of causality is sensitive measures and proxies used for financial development.

Military Expenditures and Economic Growth: Evidence from NATO and Non-NATO Alliances

ABSTRACT Given its significant socioeconomic implications, the nexus between military expenditures and economic growth has been the subject of an extensive theoretical and empirical debate. The present study focuses on NATO vs. non-NATO member countries (i.e. 141 countries) as a case study to empirically examine the aforementioned complex relationship during the period 1992–2020. Using annual data, we employ a panel model, as well as spectral preliminary analysis that takes into account the nonlinear behaviour of our series, positive or negative causal relationships and their coherence characteristics across both time and frequency domains. Findings reported herein from an extended panel of several states suggest that military expenditure enhances economic growth under the NATO alliance case, whereas it becomes harmful for growth in the case of non-NATO alliances such as the SCO & CSTO. Our study contributes to the understanding on the crucial role of a military alliance membership in the formation of the economic growth and military spending relationship. Hence, our findings can be beneficial for policymakers to account for the existence of possible spillovers that may arise from country participation in a military alliance.

Analyzing GDP Growth Drivers in Saudi Arabia: Investment or Consumption: An Evidence-Based ARDL-Bound Test Approach

This study delves into the intricate interplay of economic growth components, specifically focusing on consumption and investment in Saudi Arabia from 2000 to 2022. Employing vector error correction models and co-integration techniques, we analyze the short- and long-term dynamics within the relationship of consumption, investment, and economic growth. Granger causality analysis is also used to discern these pivotal variables’ causal connections. Our empirical analysis reveals a persistent long-term cointegration relationship among the variables, underscoring the enduring nature of their interdependency. Furthermore, our findings highlight consumption and investment’s statistically significant positive impact on economic growth. Notably, the short-term analysis unveils a stable model characterized by an annual adjustment to equilibrium of 100%. Moreover, the Granger causality study demonstrates unidirectional causal linkages among consumption, investment, and economic growth. These findings hold substantial implications for policy formulation in Saudi Arabia. Policymakers must grasp the ramifications of burgeoning prosperity and evolving private consumption patterns on future environmental outcomes. Achieving sustainable long-term results necessitates equal emphasis on bolstering private consumption and fostering other facets of economic growth.

Towards long-term relationship of transport investment and economic growth in Thailand: Implications for public policy in post-COVID-19 investment

COVID-19 has presented considerable challenges to fiscal budget allocations in developing countries, significantly affecting decisions regarding number of investments in the transport sector where precise resource allocation is required. Elucidating the long-term relationship between public transport investment and economic growth might enable policymaker to effectively make a decision in regard to those budget allocation. Our paper then utilizes Thailand as a case study to analyze the effects on economic growth in a developing country context. The study employs Cointegration and Vector Error Correction Model (VECM) techniques to account for long-term correlations among explanatory variables during 1991–2019. The statistical findings reveal a significantly positive correlation between transport investment and economic growth by indicating an increase of 0.937 in economic growth for every one-percent increment in transport investment (S.D. = 0.024, p < 0.05). This emphasizes the potential of expanding the transport investment to recover Thailand’s economy. Furthermore, in terms of short-term adjustments, our results indicate that transport investment can significantly mitigate the negative impact of external shocks by 0.98 percent (p < 0.05). These findings assist policymakers in better managing national budget allocations in the post-Covid-19 period, allowing them to estimate the duration of crowding-out effects induced by shocks more effectively.

Century of the East and Peaceful coexistence of China and India: Moderating role of Belt and Road Initiative in Emerging Asian Economies

The study focusses on historical perspective, contemporary historical perspective as well as futurologist perspective of Sino-India relations, economic development and bilateral trade. The economic growth has been examined with the interaction effect of Belt & Road Initiative. The purpose of this study is to find out the reasons of correlation between Sino-India economic growth patterns for last two thousand years as well as making recommendations for the optimal level of the relations in the region in the emerging century of East. The study further aims to examine the cross-country impact of infrastructure development on other countries. A total of thirty countries which are a part of Belt and Road Initiative were selected. The data is collected from World Bank Database from 1990 to 2019 (n=900). The data were analyzed using penal data regression models (fixed random effect regression models) to test the effect of macro-economic variables on economic growth, while hierarchical moderated regression analysis was used to determine the moderating effect of Belt and Road Initiative on the economic growth of participating economies. Belt & Road Initiative significantly moderate the relationship of economic growth with its factors. Therefore, we conclude that Belt & Road is pivotal for economic growth of region. In the century of Asia, China and India must understand that trade cooperation and congenial relations with in the region is beneficial for all the stakeholders in Asian Region while West and USA want to utilize India to halt the progress in the region and converting India a leading state to fight with China in the best interest of West. The only resolvable issues in Sino-India relations are border marketing in Tibrt, Arnachal Perdesh and Kashmir which are not only hampering the economic growth of these areas but also deviating the focus from economic growth towards militarization of the region. The limitations of this article is that the idea of Belt & Road was initiated in 2013 and different countries have joined BRI in different years. We have taken only those countries which have become a part of BRI till 2017. Another limitation is that we have selected few macroeconomic and social variables to test their effect on economic growth. We have selected those variables which are important for developing economies since majority of countries in BRI are developing. It is a unique study from the perspective, that it is using the available and estimated GDP of last two thousand years to find out the correlation between China’s and India’s economic growth and based on empirical analysis rather than theoretical one, suggesting the optimal level of relationship between China and India, why active participation of Betl & Road Initiative (BRI) by India is necessary for India’s growth.

The relationship between finance and growth in Germany and Luxembourg: A timeseries analysis approach

The present paper examines the economic growth and financial development relationship in two of the European Union’s founding countries and Eurozone members, namely Germany and Luxembourg, by taking into consideration a large period, from 1970 to 2019. We motivate the choice of these specific two countries based on the similar rate of GDP per capita growth over the years, and also on the relevance of the financial sector in the total economy. Five different measures of financial development are employed to address the depth and efficiency of the financial sector. We apply Granger causality tests, using the cointegration and Vector Error-Correction (VEC) methodology. The empirical analysis indicates consistent results, as both in the case of Germany and Luxembourg it can be established Granger causality for the economic growth – financial development nexus. There is also evidence of bi-directional relationship.

External Debt and Economic Growth Relationship in Nigeria: A Reconsideration

External Debt and Economic Growth Relationship in Nigeria: A Reconsideration

Oil rent, corruption and economic growth relationship in Nigeria: evidence from various estimation techniques

PurposeDespite the huge financial resources associated with oil, Nigeria has consistently recorded poor growth performance. Therefore, this study aims to examine how corruption and oil rent influence Nigeria’s economic performance during the 1996–2021 period.Design/methodology/approachVarious estimation techniques were used. These include the bootstrap autoregressive distributed lag (ARDL) bounds-testing, dynamic ordinary least squares (DOLS), the fully modified OLS (FMOLS) and the canonical cointegration regression (CCR) estimators and the Toda–Yamamoto causality.FindingsThe bounds testing results provide evidence of a cointegrating relationship between the variables. In addition, the results of the ARDL, DOLS, CCR and FMOLS estimators demonstrate that oil rent and corruption have a significant positive impact on growth. Further, the results indicate that human capital and financial development enhance economic growth, whereas domestic investment and unemployment rates slow down long-term growth. Additionally, the causality test results illustrate the presence of a one-way causality from oil rent to economic growth and a bi-directional causal relationship between corruption and economic growth.Originality/valueExisting studies focused on the effects of either oil rent or corruption on growth in Nigeria. Little attention has been paid to the exploration of how the rent from oil and the pervasiveness of corruption contribute to the performance of the Nigerian economy. Based on the outcome of this study, strategies and policies geared towards reducing oil dependence and the pervasiveness of corruption, enhancing human capital and financial development and reducing unemployment are recommended.

The Impacts of Globalization, Economic Growth, Population and Urbanization on Carbon Dioxide Emissions in Afghanistan

The atmospheric carbon dioxide emissions have increased since last few years in Afghanistan. This increasing trend in carbon emissions may cause global warming, climate change and environmental pollution. Consequently, these indicated threats may suffer human life and ecological conditions in near future. Therefore, this study examines the impacts of globalization, economic growth, population and urbanization on carbon emissions in Afghanistan using annual time series data for the period 1990 – 2020. The study used the Augmented Dickey Fuller and Phillips–Perron unit root tests, the Breusch – Godfrey serial correlation Lagrange multiplier (LM) test and the autoregressive distributed lag (ARDL) bounds test to examine the short and long-run relationship of globalization, economic growth, population and urbanization with carbon emissions. The empirical results show that globalization, economic growth and population have a significant positive short and long-run relationship with carbon emissions. While urbanization has a significant short-run negative and long-run positive relationship with carbon emissions. Based on results, it is highly recommended that government should design environment friendly policies related to globalization, economic growth, population and urbanization to reduce environmental pollution in Afghanistan.

Moderating role of government effectiveness and innovation in sustainable economic growth relationship in Middle East & North Africa countries

AbstractThis article examines the impact of government effectiveness (GE) and technological innovation on economic growth and environmental degradation in Middle East & North Africa countries. The study utilizes panel data from the period of 2002–2020. The findings indicate that there is a significant and positive relationship between innovation (INV) and CO2 emissions (0.0244), while GE has a significant and negative impact on CO2 emissions (−0.5753). In a similar vein, it can be observed that both INV and government efficacy exert a substantial and favorable influence on the process of economic growth (0.0353 and 0.0773). Furthermore, the interaction of INV and GE showed a noteworthy moderating effect on CO2 emissions (−0.1581). Conversely, it exhibited a more pronounced positive influence on economic growth (0.1122). The study highlights that synergizing INV with GE is essential for attaining sustainable economic growth in the studied area.

Do institutions matter for oil prices and economic growth relationship?: A regulatory policy implication

This study empirically investigates the moderating effect of institutional quality on the oil price-economic growth relationship among selected African oil-importing economies for a thirty-year period from 1990 to 2020. The study employs a panel autoregressive distributed lag (PARDL) model using a pooled mean group estimator (PMG) with oil price and institutional quality as the main variables. Results from the analyses indicate that oil price increase has a negative effect on economic growth in oil-importing countries and these results are consistent with the previous findings by Kudabayeva et al. (2024) amongst others. Moreover, the study established a positive and significant effect of institutional quality on economic growth. The positive and significant effect of the interaction term between oil price and institutional quality suggests that better quality institutions are critical for moderating the negative effects of oil price changes on economic growth, consistent with findings by Abdelsalam (2023). The findings from this study suggest that net oil importers should focus on eliminating dependency on oil energy and promote investment into alternative non-petroleum renewable energy sources for sustainable development. Policy reforms should focus on strengthening of robust institutions to mitigate the effects of oil price shocks and promote the growth prospects of African countries.

INTERACTIONS OF ECONOMIC GROWTH, PRODUCTIVITY, INVESTMENT AND EMPLOYMENT IN THE CONTEXT OF LONG-TERM MACROECONOMIC DEVELOPMENTS

The aim of this article is to discuss the relationship between economic growth, productivity, investment and employment in the economy of the Republic of Armenia by using econometric and mathematical toolkits. The study examined long-term quantitative and qualitative changes in the structure of the RA economy and their impact on economic growth, productivity, investment and employment dynamics. The study showed that during the period under review, although a stable trend of economic growth was maintained in the RA economy, the trend of labor productivity, which determines the quality of this growth, was negative, which is associated with the ongoing deterioration of the structure of the economy, in particular, declining share of industries with a high share of value added and high productivity and reducing the influence and of these type of industries. In parallel, the relationship and interaction of real economic growth, productivity, investment and employment were studied using quantitative assessment toolkit.

Shrinking cities in Poland: identification of the phenomenon and its socioeconomic implications

Motivation: A steady decline in the urban population is a pressing problem for many countries in the world. Urban depopulation is also observed in Poland. This phenomenon not only leads to demographic changes, but it also has economic, financial, social, and environmental implications. Numerous studies have shown that urban shrinkage has different causes and implications, which reflects the complex and multifaceted character of the problemAim: The aim of this article was to identify and classify shrinking cities in Poland based on the criterion of a steady decline in the urban population, to classify shrinking cities based the rate of urban depopulation, and to examine the relationship between urban depopulation and the indicators of local socioeconomic development.Results: Urban shrinkage was explored not only in the theoretical, but also in the practical context because this process can be expected to intensify in the future. The study demonstrated that the rate of urban shrinkage in Poland increased between 2012 and 2021 and affected a growing number of cities. Urban shrinkage was identified in 174 urban municipalities with the use of the proposed approach. These cities can be divided into three groups based on the rate of urban shrinkage. The identified groups of cities were characterized by different levels of economic growth and different relationships with the analyzed indicators of urban shrinkage.

Quality of port infrastructure and economic growth relationship in BRICS-T countries:empirical assessments

Ekonomik büyüme açısından liman altyapı kalitesinin sağlanması ve limanlarda gerçekleştirilen ekonomik faaliyetlerin sürdürülmesi için alt ve üstyapıya dönük gerekli önlemlerin alınması önem arz etmektedir. Bu makalede 2006-2019 arasındaki dönemde, BRICS-T ülkelerindeki liman altyapı kalitesi ile ekonomik büyüme arasındaki ilişki, Dünya Bankası ve WEF veri tabanlarından elde edilen yıllık veriler kullanılarak, panel nedensellik testi ile analiz edilmiştir. Analizde Parks-Kmenta tahmincisi ile katsayılar tahmin edilerek, Pairwise Panel Nedensellik Testi aracılığıyla da seriler arasındaki ilişkinin yönü ortaya konmuştur. Analizden elde edilen bulgulara göre; BRICS-T ülkelerinde liman altyapı kalitesinden ekonomik büyümeye doğru tek yönlü bir nedensellik ilişkisi bulunmuş ve BRICS-T ülkelerinin liman altyapı kalitesindeki %1’lik bir artışın, ekonomik büyümeyi 0.20 birim arttırmakta olduğu sonucuna ulaşılmıştır.